IMF and Jordan reach agreement on $1.2 bn loan program

Staff Reporter:

The International Monetary Fund said Thursday it had reached agreement with Jordan on a new four-year loan program worth around $1.2 billion to help it weather financial shocks including the Israel-Hamas war.

The agreement, which is still subject to approval by IMF management, will replace an existing program due to expire early next year, the Fund announced.

The IMF expects Jordan’s economy to grow by 2.6 percent in 2023, and by 2.6 percent at most next year, due to the impact of the ongoing conflict between Jordan’s neighbor Israel and Hamas militants in the Gaza Strip.

“The external environment remains challenging,” IMF Mission Chief for Jordan Ron van Rooden said in a statement, pointing to high global and regional tensions, elevated interest rates and uneven global growth.

“The conflict in Gaza and Israel poses yet another risk to the region and could adversely affect Jordan’s economy,” he added.

Fighting has raged between Israel and Hamas militants since gunmen from the Islamist group launched a cross-border attack on October 7, killing 1,400 people, according to Israeli officials, and seizing about 240 hostages in the worst attack in the country’s history.

Vowing to destroy Hamas, Israel retaliated with an aerial bombing and ground offensive that the health ministry in the Hamas-run Gaza Strip says has killed more than 10,800 people, many of them children.

Despite the fighting, Van Rooden said Jordan was well-placed to withstand any economic shocks resulting from the conflict, barring a “significant escalation” in the fighting.

“The aim is to accelerate growth over the medium term to address persistent high unemployment, while ensuring continued macro-economic stability,” he added.

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